Final Project: Marketing Plan for Beez Kneez

Submitted to:

Professor George Dierberger

BUSN645: Managerial Marketing

July 31, 2011

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Beez Kneez Mission, Vision and Values Statements

Mission Exceeding customer expectations by creating superior environmentally conscious beauty and

skin care products.

Vision Through our integrity, commitment to service and rigorous ethical standards our customers

experience the benefits of our high quality, natural, organic ingredients in every product we

produce. Our dedication to the environment is reflected in our use of all-natural organic

ingredients and our production and packaging processes meet high standards to keep our

footprint at the absolute minimum. We live out our philosophy of protecting the environment by

committing 10% of all profits to environmental protection causes and are actively involved in

community efforts.

Value Proposition We provide value to the marketplace by delivering premium quality beauty and skin care

products with all-natural and organic ingredients. We differentiate ourselves from existing

competitors in the marketplace by focusing on a younger demographic; especially females aged

16-44 (with a product line for tween girls age 11-16 and a product line for males age 16-44),

using more natural and organic ingredients than our competitors, and leveraging our geographic

location in the upper Midwest. We will utilize brighter packaging, social media outlets, and

develop business to business partnerships with eco-friendly partners.

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Situation Analysis

Market Summary/Size of Market Beez Kneez produces skin care and lip balm products made with all-natural USDA certified

organic ingredients for women, men and teenagers. According to the Organic Consumers

Association (OCA), “the U.S. government doesn't regulate cosmetics for safety, long-term health

impacts or environmental damage. Many common cosmetics ingredients are harmful to people

and the environment. Consumers can avoid toxic ingredients by using USDA certified organic

cosmetics. The trouble is, while the USDA allows cosmetics to be certified organic, it doesn't

require it” (The Story of Cosmetics, 2011). Consumer groups such as the OCA; however, are

asking retailers to take action by addressing the issue of ‘organic fraud’ with products they sell

which makes it imperative for Beez Kneez products to be certified organic from the USDA.

Table 1 illustrates that the number of consumers purchasing organic skin care products has

increased steadily over the past three years.

Table 1: Percentage of Consumers Purchasing Organic Cosmetics and Toiletries (Pitman, 2011)

Three Year Trends Nov. 08 Dec. 09 Jan. 11

Skin Care 5.4% 5.9% 6.6%

Cosmetics 2.9% 3.7% 2.6%

Hair Care 3.7% 3.7% 2.6%

The global skin care market is estimated to be a $43 billion per year business (Skin Care Market,

2010) and the market for U.S. natural and organic personal care products had sales over $5

billion in 2010. The natural and organic personal care products market is continuing to grow and

widen and some brands can now be found in supermarkets, drugstores, mass merchandisers and

club stores. (Payne, North American Natural & Organic Personal Care Market Exceeds $5

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Billion, 2011) Below is a summary of Beez Kneez’s target market, market trends and market

growth.

Target Market Beez Kneez projects to earn market share in the growing segments of natural and organic

products that include lips balms and skin care products. Customers in this demographic care

about the environment and do not want chemicals used in their skin care products. This will be

achieved by targeting females ages 16-44 that are concerned with the products that come in

contact with their skin. A subgroup in the tween demographic of 11-16 year olds will be targeted

with a separate product line. Building tween brand loyalty will be essential to ensure they grow

into our adult line of products.

Per DERMAdoctor.com, “Today's consumers are intelligent. They want skincare products that

are effective and contain natural ingredients, but also the scientific research to back them up,”

(Skincare Trends to Watch in 2011, 2011). The all-natural ingredients used in Beez Kneez

products will appeal to these consumers and will have the scientific testing to back up claims

stated on packaging.

As the consumer population becomes more aware of the effects of the sun at an earlier age and

the need to take care of their skin, Beez Kneez will have products available to keep their skin

looking youthful. “The skin wellness benefits that facial care products are providing such as age-

defying, wrinkle reduction, and reduction of puffiness around the eyes are directly targeted at the

aging population,” says Wendy Haas, product manager at Rockline Industries of Sheboygan,

Wisconsin (Driscoll, 2007). Women are purchasing these products at a younger age than in the

past and Beez Kneez will meet their needs in the marketplace.

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The young adult and tween market will offer opportunities to create products that appeal to their

needs. Also stated in the article by Driscoll, “Another popular trend in the teen facial care

market is an interest in products that blur the lines between traditional makeup and facial care

products. For example, the adult youth market is seeking new and more exotic flavors in lip

balms, moving from cherry and strawberry to more exotic mango, strawberry kiwi and orange

citrus,” (2007). Offering products with unique flavors and scents that appeal to youthful senses

will develop relationships with this demographic that will eventually develop into brand loyalty

for future purchases into the adult lines.

Male facial care has become mainstream, thereby, producing a male and young male product line

will also give Beez Kneez product differentiation from many competitors. According to a report

by The Simmons National Consumer Study, 32% of men of all ages use moisturizers. Teenage

males “are seeking and trying new toiletry concepts and products, while men aged 18-34 are

purchasing more toiletry products than their elders” (Driscoll, 2007).

Market Trends Private Label Competition

The personal care industry, like most industries, has been impacted by the recent economic

downturn. Consumers who previously purchased national brands on a regular basis have begun

to consider private label brands as a viable purchasing alternative. According to one study, 45%

of consumers across 20 countries are buying more private label products now than a year ago.

(Whalley, 2011) While national brands are still most recognized in terms of quality and

nostalgia, private label brands are growing in terms of awareness. As a result, national brand

manufacturers may soon become more interested in developing their own private label brands.

(Whalley, 2011)

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Globalization

Personal care products are unique because they encompass both the wants and needs of

consumers. Affordable products that offer basic hygiene are positioned alongside premium

products that offer a more upscale image to the buyer. Due in part to this universal quality,

personal care products easily translate to new markets internationally. For example, China is

growing as a marketplace for premium products despite slowing economic activity. The market

growth for higher-end products and services in China are driven by a complex mix of economic,

social and cultural factors. These include China's strong economic growth and the very sudden

developments in consumerism contrasted against years of socialist life, and the Chinese

consumer's material aspirations. (MarketWatch, July, 2010) European consumers have

continued to splash on fine fragrances throughout the recession, according to a new study

conducted by Datamonitor. The research reveals that consumers are willing to sacrifice other

parts of their personal care regimen before fragrances. (MarketWatch, March, 2010)

All-Natural

There is an impetus for brands to develop an ever-green personality and relevant dialogue with

consumers. Among brands like Burt’s Bees, Tom’s of Maine and JR Watkins, the all-natural

component of the brand image plays a critical part. This connection to the environment seems to

have only deepened in recent months. Last December, industry giant Procter and Gamble

announced its first North American manufacturing plant to achieve zero waste to landfill. Burt's

Bees keeps compost bins in its break rooms and it provides utensils made from potatoes that can

themselves be composted. (Brandel, 2009)

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Market Expansion to Youth and Males

While the personal care and beauty products have historically been driven by female consumers,

companies have begun to target a younger audience, and even males. Younger consumers are

more willing to try different brands including private label options. (Whalley, 2010) Personal

care industry titans Procter & Gamble, Unilever, and Beiersdorf are aiming new online

marketing at males. Among the sites recently launched are Gillette’s “Career Advantage”,

Nivea’s “Groom Room”, and Axe’s “The Fixer.com”. (Alexander, 2009) It may be surprising to

men and women alike, but soon males may be at the center of personal care advertising

campaigns.

Market Growth Market growth for the natural and organic personal care products will continue. In 2010, the

North American market for natural and organic personal care products recorded sales in excess

of $5 billion. (Payne, North American Natural & Organic Personal Care Market Exceeds $5

Billion, 2011) The majority of sales from this product line are distributed by small retail

companies along with larger corporations such as Clorox, Procter and Gamble, and Colgate.

These larger companies are entering into the market by purchasing smaller more established

players; such as Clorox purchasing Burt’s Bees and Colgate purchasing Tom’s of Maine.

Bigger companies are trying to take hold in the market, but smaller companies are still very

present. For example there are over 600 brands in the North American market, but the market

share majority is controlled by a few companies (Figure 1). (Payne, North American Natural &

Organic Personal Care Market Exceeds $5 Billion, 2011) According to Organic Monitor, the

demand for natural products will strengthen and that by 2017 the North American revenues will

reach $8 billion (Figure 2).

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Figure 1: U.S. Natural Personal Care Market Chart. (Knauss, 2008)

Figure 2: Natural Personal Care Growth Chart. (Knauss, 2008)

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Through literature reviews and research it can be inferred that differentiating products from

competitors is the key. Setting the product apart geographically or by ingredients used in the

product is important. Establishing this uniqueness and special brand awareness to a specific

region, along with excellent distribution channels in place will grow the product. As Beez Kneez

starts out, expectations are to have a 0.025% market share in the natural personal care market.

Table 2, below, illustrates growth rates for the overall personal care market, the natural personal

care market, and the expectations for Beez Kneez.

Table 2: United States Growth Rates for Personal Care Markets.

YearBillions Rate Billions Rate Millions Rate

2012 62.40$ 3.2% 6.40$ 7.7% 1.50$ 7.7%2013 64.40$ 3.2% 6.89$ 7.7% 1.62$ 7.7%2014 66.46$ 3.2% 7.42$ 7.7% 1.74$ 7.7%2015 68.58$ 3.2% 8.00$ 7.7% 1.87$ 7.7%2016 70.78$ 3.2% 8.61$ 7.7% 2.02$ 7.7%

Overall Personal Care Market

Natural Personal Care Market

Beez Kneez Expected Growth (0.025% Share

of Market)

United State Growth Rates

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Critical issues and keys to success for Beez Kneez are listed in the table below in Table 3.

Table 3: Beez Kneez Critical Issues and Keys to Success.

Critical Issues Keys to Success 1. Organic certification.

The FDA currently has no formal definition regarding the terms “organic” and “natural” meaning that “manufacturers can use ingredients of their choice to convey these terms” but that may change in the future. (What Does a Natural or Organic Skin Care Product Mean?, 2011)

• Using USDA certified locally grown organic products.

• Using more natural ingredients than competitors.

2. Differentiating Beez Kneez products from the competition.

• Product differentiation by entering the tween and male markets.

• Setting the product apart geographically or by ingredients used in products.

3. To have access and representation through skin care distributors.

• Create strong distribution channels with regional distributors who already have established relationships and contacts with local retailers.

4. Green/environmentally conscious products. Increased interest in the skin care industry to reduce waste, water and energy consumption related to packaging, as well as cooperation with packaging suppliers in efforts to reduce the overall carbon footprint of products. (Supply Chain Analysis Holds Key for Sustainable Packaging, 2011)

• Profitable, socially and environmentally responsible value systems.

• Scan supply chains to determine the true value proposition of different strategies to reduce, reuse and recycle. (Supply Chain Analysis Holds Key for Sustainable Packaging, 2011)

5. Creating awareness for products. • Create a logo that distinctly identifies Beez Kneez products.

• Determine which advertising medium or methods are best to reach target audience.

• Use a mixture of interactive marketing campaigns, online video advertising, social media and face-to-face marketing efforts.

Market Plan

The identification of what kind of company Beez Kneez will be has been completed in the

previous market analysis section. The company has been organized around a core set of beliefs

laid out in the mission and vision statements and the value proposition. Beez Kneez has

identified its main target customers and identified a gap in the market which the company can

fill. The following market plan identifies strategies that will help set the Beez Kneez company

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up for success as well as identify how the company’s products will be positioned. The

following market plan includes SWOT analyses of Beez Kneez and two competitors. The plan

will also identify how Porter’s Five Forces will have an effect on the company and will address

how products will be positioned.

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Beez Kneez SWOT Analysis Strengths Weaknesses

• All-natural branding fits with growing expectations that personal care products are organic, unprocessed, etc.

• Personal care products are seen by most as necessary for proper hygiene. This insulates the industry to some degree from economic downturns.

• A product that closely ties to the mission and vision of the company as a whole - brand and product cohesion.

• Product ingredients superior to competitors.

• Giving 10% of profits reinforces idea of corporate responsibility and evokes positivity about company.

• Research helps to ensure that product offerings are meeting the needs of the marketplace.

• There is no established manufacturing infrastructure.

• There are no established distribution channels.

• New brand with no established customer base or brand equity.

• Lack of entrepreneurial background by company founders.

• Need for additional capital investments prior to becoming fully functional operation.

• Being new and small does not typically allow for expansion into emerging international marketplaces.

• Possible perception that product offerings are not differentiated from competition.

Opportunities Threats • The marketplace for natural, personal

care products is growing. • There are no entrenched, category

giants in any of the personal care product categories.

• Younger consumers are less loyal to existing brands and are willing to try new products if properly incentivized.

• Youth and males have not had personal care products heavily marketed to them in the past - they remain a largely untapped market.

• Partnerships with other organizations and the leverage that those established brands offer.

• Utilizing social media in order to gain insight and effectively impact a new customer base.

• Utilizing trade shows to promote the brand and product offerings face-to-face.

• The economic downturn has created an opportunity for private label products to successfully gain a stronghold in the marketplace.

• Premium price position may impact ability to reach youth and males.

• There is the potential for brand confusion by launching products aimed at sub-groups like teenagers and males at the same time that the "Beez Kneez" brand is trying to establish itself and its flagship product offerings.

• The possibility that additional government regulation will be imposed upon those personal care product manufacturers who claim their products are "natural".

• Utilizing an overly regionalized marketing approach could harm the company's ability to extend their reach down the road.

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• Well-known competitors with established brands and customer bases.

Competitor SWOT Analysis: Burt’s Bees

Strengths Weaknesses • Been in business since 1984 with strong

brand recognition • Offers a variety of products for lips,

skin, hair, body, toothpaste, baby and men

• Strong distribution system • History of giving back to the community

through organizations such as Habitat for Humanity

• Strong employee culture

• Does not have a line that appeals to tween market – particularly flavored balms

• Owned by Clorox Corporation – large company that can change the culture at Burt’s Bees

• Brand that has been around awhile that cannot offer a premium price point for many of the product lines

Opportunities Threats • To develop a private label business; as

this is a growing segment • Develop product lines to include teens • Expand men’s product lines • Create a natural cosmetics line for

women and teens

• Competition in the marketplace with more companies producing “natural” or “organic” products

• Private labels are gaining market share • Regulation of product labeling

(Burt's Bees, 2011)

Competitor SWOT Analysis: J. R. Watkins

Strengths Weaknesses • Been in business since 1868 • Midwest company that is in target

market region – Winona, MN • Has an established distribution system • Has natural products outside of skin care

line • Supports many community programs

locally and nationally

• No specific men’s product line • Brand packaging is not as eye catching

as Burt’s Bees; especially when placed side by side on store shelves

• Variety of product lines that include home cleaning and food products that are unrelated to personal care products

Opportunities Threats • Target market men’s skin care line • Develop private label brand • Develop a natural cosmetics line • Expand personal care products that

appeal to tweens; by offering popular new flavors/scents

• Competition in the marketplace with more companies producing “natural” or “organic” products

• Private labels are gaining market share • Regulation of product labeling

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(J. R. Watkins, 2011)

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Porter’s Five Forces

Threat of New Entry: • Expensive to enter the

industry • Experience needed • Private label products

gaining market share • Asset specificity high • Restricted distribution

channels • Low threat of entry +

Competitive Rivalry: • Many competitors • ‘Mom and Pop’ stores

have 50% of the market (Appendix A)

• Industry growth • High exit barriers • Overall: -

Buyer Power: • Many buyers • Unique products • Ability to substitute • Brand identity strong • Overall: neutral

Supplier Power: • Small number of suppliers • Suppliers small • Not able to substitute • Minimal differentiation of

inputs • Unique products • High supplier power --- Threat of Substitution:

• Low cross-product substitution

• Moderate switching costs • Overall: Neutral

-

Competitive Rivalry

Supplier Pow

er

--

Threat of Substitution

O

Threat of New Entry

+

Buy

er

Pow

er

O -

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Product Positioning With over 75% of the over natural care products coming from the “other” business, rather than

companies such as Procter and Gamble, Colgate and Clorox, it can be inferred that smaller

companies can succeed in the natural skin care product market. (The Clorox Company 2009

Annual Report to Shareholders and Employees) Positioning the product will be important. Beez

Kneez will be identified by a specific geographical location; it will be a brand where people can

identify with where the product has been made. “Position (of a product) is the total

characteristics of all of the perceptions, imagery, features, and benefits, created around the

product or service” (Tutor2u, 2011). Figure 3 illustrates the areas in which Beez Kneez will

stand out, the products position compared to the “best of the rest in the market”, and how

products will be portrayed in the marketplace.

Figure 3: Beez Kneez Product Position versus Best of the Rest in Market.

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In developing the product position for Beez Kneez, gaps in the market place were researched.

Beez Kneez products will occupy gaps in the market that exist with current products. Beez

Kneez will also have the potential to develop a “me too” image to rival existing, like products.

(Tutor2u, 2011)

Pricing

Numerous studies have been conducted on the importance of correctly pricing a product. Also,

various strategies have been utilized to come up with a “correct” price. Beez Kneez will be

marketing lip balm and lotions to a specific market segment and the products will be entering

into a market that already has major players. Because of this, several factors will need to be

considered. Research as shown that not only is it generally easier to gain acceptance of a price

with a new product than an existing product, but the initial price becomes the reference point for

future prices and influences customer perceptions. (Rochford, 2000) Researchers assert the

following need to be taken into consideration when pricing a product:

• Company objectives and strategies

• Competition

• Legal constraints

• Customer demand

• Costs

It should also be considered that after a successful company, such as Burt’s Bees, has introduced

a successful new-to-the-world product, additional imitative products that follow it face a more

difficult challenge since they are not novel and unique. They must provide added value to

persuade customers to purchase and one way to do this is to have lower introductory price levels.

(Urban and Hauser, 1993) Research has also shown that lower price levels do not necessarily

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give a product a competitive advantage. Research has also shown that new products rated as

having superior competitive advantage also utilized relatively higher prices. (Rochford, 2000)

Beez Kneez will provide a superior competitive advantage in the way of regional familiarity

(with the labeling and product ingredients) and with a specified niche population that Beez

Kneez will market to.

The following pricing methods were researched:

• Cost-plus pricing: set the price at the production cost plus a certain profit margin.

• Target return pricing: set the price to achieve a target return-on-investment.

• Value-based pricing: base the price on the effective value to the customer relative to

alternative products.

• Psychological pricing: base the price on factors such as signals of product quality,

popular price points, and what the consumer perceives to be fair.

(Internet Center for Management and Business Administration, Inc. 2002)

Beez Kneez will use a combination of these pricing methods; however, the main theme for

pricing will follow the psychological pricing method. Beez Kneez will trend off of popular price

points, identify signals of the quality of the product and consumers perception of ‘fair’.

After researching the price of comparable products from various distributors the following

information was taken into consideration when determining the price of Beez Kneez products

(Tables 4 and 5).

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Table 4: Lip Balm Pricing.

Lip Balm Column1blistex-tube 2.19$ carmex-tube 1.69$ chapstick -tube 1.25$ Burt's Bees-Beeswax lip balm tin 3.00$ Burt's Bees-Beeswax lip balm tube 3.00$ Burt's Bees-Honey Lip balm 3.00$

Table 5: Lotion Pricing.

Lotion Column1 Column2 Column3Johnson & Johnson 4.54$ to 7.99$ Vasoline 4.29$ to 7.99$ Curel 4.49$ to 7.99$ Burt's Bees-Cans of Lotion 13.00$ Burt's Bees-Tube of lotion 8.00$

Of all the lip balms and lotions sold from the products listed above, Burt’s Bees has the highest

prices; confirming what research has indicated. The following table shows the price in which

Beez Kneez will sell its products.

Table 6: Beez Kneez Product Pricing.

Beez Kneez Poduct Pricing Column1Lip balm-tube 3.10$ Lip balm-tin 3.10$ Cans of lotion 13.25$ Tube of lotion 8.25$

Current Product Offerings

Beez Kneez will enter the market with a number of products that will set the tone for future

opportunities. All the products will be made with all-natural USDA certified organic ingredients.

Initially the focus will be on lip and skin care lines for women and teens. This focus will allow

easy expansion into products for tweens and men. Concentrating on specific product lines will

allow Beez Kneez to garner shelf space and get the Beez Kneez name into the marketplace.

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The first line of products will be lip balms. “The purpose of all lip balms -- even those called

salves or butters -- is to protect the lips. They contain a moisturizing ingredient that forms an

occlusive film on the lips, which prevents water loss,” says cosmetic chemist Ni'Kita Wilson,

Vice President of Cosmetech Laboratories in Fairfield, New Jersey. (Levitt, 2011) Beez Kneez

lip balm products will contain a wax base and will contain natural ingredients such as sunflower

oil or shea butter as the occlusive ingredient needed to adhere to the lips.

From there Beez Kneez will offer skin care cleansers, exfoliates moisturizers and sunscreen

which are the all necessary products for a basic skin care regimen. (Derrick, 2011) These will be

available for skin that is dry, normal or oily. The bonus is that products can be sold individually

or packaged together for promotional purposes or as a skin care essentials kit. Anti-aging

products will not be in the initial product line as the initial focus will be that using the four-piece

regimen will keep the skin younger looking. Therefore yielding a higher price point will

eliminate the need to introduce additional products in the market on the onset.

A complementary product line will be body scrubs and lotions. Beez Kneez is in the business to

take care of people’s skin from head to toe. A body scrub will exfoliate the dead skin cells all

over the body, then allowing a lotion to moisture the skin after a shower or bath will be the right

product combination for younger looking skin. (Adkins, 2011) Each of these lines will offer a

variety of scents that appeal to the target market and will stay true to the brand’s identity of

naturally and organically derived ingredients.

In summary, Beez Kneez will initially offer the following products:

• Lip Balms • Facial Cleansers • Lotions • Moisturizers • Sunscreen

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A product label was created* that distinctly identifies, defines and differentiates Beez Kneez products. Please see the sample label below.

*Label created by Katie Woods, Parfait Creative, LLC 2011

New Product Opportunities

Given that there is no singular, dominant player in the personal care marketplace, there is ample

opportunity for Beez Kneez to both establish flagship product(s) and to grow into niche markets

as well. Each major brand name in the industry has first established credibility with their target

market through excellence in a particular product or product family. Procter & Gamble’s Olay

brand has made skin care their primary focus. Carma Labs-owned Carmex is well-recognized

for lip balm, while Burt’s Bees is known for their all-natural approach to lip and skin care. The

J. R. Watkins group has grown out of a drug store background, offering an array of products

while in recent years embracing their vintage and all-natural history.

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While skin and lip care are traditionally entry points into the marketplace, each of these

companies have branched out into other niche markets. Carmex is becoming more organic and

youthful as evidenced by the look and feel of their recent social media marketing campaign.

(Drug Store News, 2009) Burt’s Bees has integrated toothpaste and gift baskets into their product

portfolio as they discover how far consumers will let them expand their brand. J. R. Watkins is

now selling cleaning products, soups and spices. Tom’s of Maine has gone from the lips to the

mouth, now offering mouthwash, toothpaste, and even deodorant. Even the ultra-targeted Olay

has expanded their line of creams and moisturizers into body washes and shower products.

Males

The male demographic is one that has been overlooked historically by many in the personal care

market. It has always been a challenge to establish a brand and products that appeal to men and

women alike when they have both vastly different buying criteria and hygiene needs. Tried and

true brands like Gillette and Old Spice are well established with products like razors, shaving

cream, deodorant, and aftershave. Is there a place for a new men’s shampoo? What would

attract a male audience to a new kind of sun block? With proper marketing and packaging, each

of these offerings would be worth considering as Beez Kneez grows and expands.

Youth

Younger consumers are more willing to try different brands than their older counterparts.

(Whalley, 2010) By establishing this younger customer base through social media and targeted

marketing, Beez Kneez could have an advantage over other brands that may seem older and

more sophisticated by comparison. The name “Beez Kneez” has a youthful feel about it, and

would translate well to an elementary-aged audience. Sparkling lip balm and glitter lotions and

sun blocks already exist but would make a cohesive fit into Beez Kneez’s product offerings.

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Shaving Gel and Deodorant

Deodorant has established brands and consumers who typically are loyal to those brands. The

principle –“if it ain’t broke don’t fix it” applies here. How does one properly incentivize a

consumer to try a new brand if there is no compelling reason to leave their old brand? Beez

Kneez would likely not be able to undercut competitor pricing, and samples are hard to distribute

unless they are mailed or given out at a trade show. Getting a foothold in this area may prove

difficult. However, deodorant does mesh well with the existing product portfolio, especially if

targeted to women.

Toothpaste and Mouthwash

These products are similar to shaving gel and deodorant in that there are established players in

the marketplace. One additional challenge is that toothpaste and mouthwash are not external,

topical products. While they are not meant to be ingested, they must be regulated as if they

would be. This makes additional regulation likely. Not many brands have expanded to

toothpaste from other markets and been successful. While this would have its challenges, the

common thread of personal hygiene still applies and an all-natural offering could prove to be a

valid differentiator.

Cleaning Products

Cleaning supplies offer an interesting expansion opportunity. The organic cleaning supply

market is still relatively new, and offers hope of further expansion. In addition, preferential

qualities like taste and color are largely unimportant to consumers. If the cleaning product gets

the job done at an affordable price while not having an offensive smell and delivering on the all-

natural brand promise, then the product is likely a winner. While cleaners are not hygiene

products, they do reinforce the differentiation of being eco-friendly when pitted against brands

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that use chemicals. Cleaning products could in time make a strong addition to the Beez Kneez

product portfolio.

Food

Food is a great brand builder, but it is difficult to establish. It is highly regulated and very time

sensitive without preservatives to ensure fresh products. There is also typically low margin in

the food industry. Items like packaged dry soup mixes and spices would be options, but it may

prove difficult to make the leap from skin care to pre-packaged dry foods and still maintain a

cohesive brand identity in the eyes of the consumer.

Camping and Outdoors

Brands like Coleman, LL Bean, and Columbia and retailers like REI are well-known stalwarts of

the camping and outdoor industry. While they are trusted names, they are largely associated

with gear, but not as much with ancillary supplies. Items like sun block, insect repellent, soaps,

and fire starters all offer opportunities for Beez Kneez. While this is a small niche, it may be one

worth exploring because of the strong tie between those who are outdoor enthusiasts and their

connection to all-natural product offerings.

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Advertising and Promotion Summary

The proposed advertising and promotional calendar will effectively utilize limited funds in a

highly targeted way so that their use is fully maximized. The public relations budget will be

spent primarily to promote new accounts as they are secure and to give Beez Kneez with a

positive brand image. This will be accomplished through cause-related marketing, especially

those circumstances promoting green, all-natural living.

Print ads will be utilized throughout the year, especially at the peak sales times of seasonal

product offerings such as lip balm, hand lotion, and potentially sun block. These print ads will

include coupons and promotional offers, which explains the rationale for an account specific

budget that largely mirrors the print ad calendar. Sampling will also play a role in these months,

as a coupon coupled with a sample will increase the likelihood of a consumer trying out a Beez

Kneez product. Trade shows will be a major part of Beez Kneez's strategy to gain brand

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awareness. As such, a consistent presence is necessary throughout the course of the calendar

year.

The proposed key account schedule will aggressively pursue smaller more accessible outlets in

order to gain a foothold in the marketplace. Large pharmacy chains like CVS and Walgreen's

remain viable distribution avenues because of their accessibility and desire to carry additional

organic offerings for their consumers. They also present an opportunity for Beez Kneez to

leverage the names of well-recognized and trusted brands as carriers of Beez Kneez products.

The Vitamin Shoppe is much smaller in size and scope than the aforementioned pharmacy

retailers, but also promote a healthy and natural living style that meshes well with the Beez

Kneez brand promise.

Grocery outlets like Festival Foods, Lunds & Byerly's and Kowalski's were selected because of

their upscale approach and premium offerings. Despite low margins, a new local all-natural

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product that does not require a great deal of shelf space to display may be appealing to some of

these outlets. Whole Foods makes sense to pursue because of their obvious focus on all-natural

living.

Retail distribution channels can be difficult to establish for a new company and that is one of the

reasons that Beez Kneez will seek to create strong ties with independent retail outlets; especially

in the Twin Cities metropolitan area. This approach also provides the added benefit of being

connected to the many co-ops that are in the area. GNC is one of the few viable retail outlets

that could be a fit for Beez Kneez as they have made an effort to expand to health and beauty in

recent years, and could down the line present a good opportunity for men's products.

Integrated Marketing Communication Plan

Beez Kneez will incorporate an Integrated Marketing Communication (IMC) plan. An IMC plan

can be defined numerous ways; for the purposes of this report, the following definition

encapsulates the Beez Kneez IMC plan: An IMC is a comprehensive plan that aligns a

company’s message about a particular product. A good IMC will get a uniform message out to

the greatest number of consumers at the lowest possible cost to the company. Figure 4 below

illustrates the points of emphasis of the Beez Kneez IMC plan.

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Figure 4: Beez Kneez Integrated Marketing Communication Plan.

Continunity Programs: Beez Kneez will offer incentives such as giving away local concert or

sporting event tickets for repeat customers to ensure repeat purchases to strengthen brand loyalty.

Direct marketing: Focus will be on the following three direct marketing tactics due to budget:

mobile messaging, email, and outdoor advertising.

Sampling: Beez Kneez will distribute products at tradeshows, concerts, local and state fairs, and

small town gatherings.

Cause Related Marketing: Beez Kneez will get involved with environmentally friendly

initiatives to better the image among potential and current customers.

Integrated Marketing

Communication Plan

Continuity Programs

Direct Marketing

Sampling

Cause Related

Marketing

Publicity(Local T.V.)

Special Packaging(Regional)

Point of Purschase

Ads

Social Media

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Publicity: Send news releases to local (small and medium) market televison stations. These

markets are always looking for a small town “cutesy” story to run in the third segment of the

news. An example would be the way Leinenkugels gets local news coverage by throwing a party

for their customers.

Special Ppackaging: Beez Kneez will make the packaging look and feel regional to connect

with local demographic’s sense of belonging to the product.

Point of Purchase Adds: Display in-store signs at local salons and coffee and ice cream shops;

specifically shops that offer organic or all-natural products.

Social Media: Set up a Facebook, LinkedIn and Twitter accounts to spread the word.

Beez Kneez’s marketing efforts will be backed through financing efforts as shown in the

financial section below. Beez Kneez will outsource manufacturing to a company in Wisconsin

(TBD) as recommended by Professor Dierberger. By outsourcing through a proven reputable

manufacturer, Beez Kneez will gain efficiencies and expertise through the organization’s

manufacturing process. This will also allow for lower overhead costs for Beez Kneez and will

be reflected in the marketing efforts and the financial bottom line.

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Financial

Beez Kneez 5 Year Financial Projections Year 1 Year 2 Year 3 Year 4 Year 5 Revenues 1,000,000 1,200,000 1,400,000 1,600,000 1,800,000 Costs of Goods Sold 500,000 600,000 700,000 800,000 900,000 Gross Margin 500,000 600,000 700,000 800,000 900,000 Less Operating Expenses Marketing 73,000 87,600 105,120 126,144 151,373 Sales and Admin 100,000 120,000 144,000 172,800 207,360 Depreciation 3,300 3,300 3,300 5,000 5,000 Insurance 1,200 1,500 2,000 2,600 3,200 Packaging/Distribution 0 0 0 0 0 Utilities 5,000 5,000 5,000 5,000 5,000 R&D 0 0 0 20,000 25,000 Total Operating Expenses 182,500 217,400 259,420 331,544 396,933 Operating Income 317,500 382,600 440,580 468,456 503,067 Less: Interest Expense* 46,813 44,016 40,865 37,314 33,312 Gain on Sales of Equipment 0 0 0 500 0 Income Before Taxes 270,687 338,584 399,715 430,642 469,755 Income Tax Expense 108,275 135,434 159,886 172,257 187,902 Net Income 162,412 203,150 239,829 258,385 281,853 Start-Up Costs Supplies 2,500 Machinery/Equipment 15,000 Product Artwork 30,000 Total Start-Up 47,500 Total Net Income Year 1 114,912

*Interest expense is based on a 10 year $400,000 loan at a 12.0% interest rate (rate determined by TCF Personal loan rates as of 7/29/11).

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Beez Kneez will apply for federal and state grant monies available to new businesses;

specifically small business grants and women and minority owner monies. Beez Kneez will

research grants and loans through the U. S. Small Business Administration. There are grants

available through the United States Department of Agriculture that Beez Kneez may qualify for

with the organic product offerings. (Research Grants for Small Businesses, 2011) Beez Kneez

will also secure “Angel” investors and venture capitalists to invest in the organization. The more

money that is secured through grants and investors will decrease the amount of personal loan

monies needed, therefore the potential to substantially decrease the interest payments will be in

Beez Kneez best interest. Since this will be a new business Beez Kneez will look to defer income

tax payments as allowed by law.

Summary

Beez Kneez has defined itself through the mission and vision statements and value proposition.

The target audience has been identified and the products consumers want will be available to

them at a price point at which they are willing to purchase. The research of the industry shows

there is room for competition and Beez Kneez will move in for a portion of the market share by

appealing to the organic and natural product users. The products will be marketed through many

outlets, with a focus on tradeshows, prints ads and social media. Through the aggressive

marketing efforts of Beez Kneez the revenues and expenses defined in the 5-year financial plans

will be easily attainable.

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Appendix A

http://factfinder.census.gov/servlet/IBQtable?_bm=y&-ds_name=EC0744SSZ6&-NAIC